Using ILAs such as host and homeshare could save the government $260 million over five years if 500 more people each year chose to live in an ILA, rather than in a group home.
That’s according to the Summer Foundation, a key contributor to KPMG’s Tax concession for live-in supporters report.
The report says ILAs are a cost-effective form of support for people with disability and typically cheaper than group homes.
It recommends a tax concession for live-in supporters, which could make Individualised Living Arrangements (ILAs) more accessible and attractive.
“ILAs are proven to be extremely successful in the UK and Canada, providing a huge benefit to the community. There is also good research to show they are very cost-effective,” said report author Alia Lum, head of tax policy at KPMG.
“We recommend that Australia align with the approach taken in countries like the UK where specific tax relief is provided for live-in supporters, to make this type of support more readily accessible and attractive. We are at a critical juncture, where the cost of the NDIS continues to escalate, so one way of making the NDIS more sustainable is to scale up the use of ILAs.”
Underutilised resource
According to KPMG ILAs are underutilised in Australia, not helped by uncertainty around the tax consequences for live-in supporters and complexities around determining their tax deduction claims. Just 520 NDIS participants are currently living in ILAs supported by NDIS providers in Australia, while more than 10,000 people with disability in the UK are living in these types of arrangements.
Built around the choices and preferences of the person with disability, ILAs are a contemporary model of support where a person voluntarily provides support in the home and can receive a payment or stipend. These arrangements help individuals to live as independently as possible, and can accommodate for a variety of support needs, from assisting with daily tasks to companionship.
But the blending of the live-in supporters’ activities and home environment, combined with the fact that supporters need to keep and maintain detailed records to substantiate tax deduction claims, means that navigating the existing tax rules is challenging.
“A concession should be provided to simplify things, along the lines of the successful UK approach,” Ms Lum said.
Growing the sector
Summer Foundation head of policy, communications and systems change Jessica Walker, said the more there is room for the sector to grow in Australia.
“There are more than 40,000 Australians with disability who have high support needs and a tiny fraction of those people are currently living in these types of arrangements. But we think there’s plenty of room to grow,” she said.
“The expansion of alternative housing and support options should be an urgent priority for Government, given the cost pressures on the NDIS and the poor outcomes from group homes.
“The introduction of a concessionary tax treatment for live-in supporters would make host and homeshare arrangements much more attractive to live-in supporters and providers wanting to offer these types of arrangements. Individuals who take on voluntary live-in support roles should be granted recognition—through fair, tax-free treatment that reflects their vital contribution.”
Where a live-In supporter’s income from an ILA is equal to or less than the fixed relief amount, no tax would be payable. Where the live-in supporter’s income from the ILA exceeds the fixed relief amount, the difference would be treated as taxable income. This concession would only be available to specified ‘qualifying’ live-in supporters.
“This would remove the compliance burden placed on live-in supporters, by relieving them from the complexity of determining their tax-deductible expenses, including partial tax deductions, and allowing live-In supporters to keep much simpler records,” Ms Lum said.